Emergency loans are newly available to sole proprietors, and new guidance accompanies this relief.

With the coronavirus pandemic continuing to put immense pressure on businesses of all sizes, the U.S. government’s Payroll Protection Program(PPP), part of the $2 trillion CARES Act, has been rolling out to help businesses maintain employees. This program started accepting small business applications on April 3 and as of April 10 is now accepting applications for contractors and self-employed individuals.

At the third National Small Business Town Hall, held on April 10 by the U.S. Chamber of Commerce and Inc., a panel of business experts discussed the latest developments surrounding this important legislation with an emphasis on contractors and the self-employed.

During the Town Hall, Inc. editor-at-large Kimberly Weisul spoke with several community leaders, including Neil Bradley, Executive Vice President and Chief Policy Officer at the U.S. Chamber of Commerce; Keith Hall, President and CEO of The National Association for the Self-Employed; Sarah Jennings, Principal of Accounting and Outsourced Solutions and Director of Strategic Initiatives and Community Engagement at Maner Costerisan; Tanya Motta, Vice President of Domestic & Global Programs at California Asian Pacific Chamber of Commerce; and Bridget Wetson, Acting CEO of SCORE.

Here are six important takeaways from the panel regarding 1099 workers and how they can navigate the PPP process.

What documents 1099 workers need to apply for PPP loans

Bradley said more than 20 million 1099 workers could potentially apply for this program. He said they should use the same form that small businesses are currently using to apply for these loans, except they would substitute their income in place of the average monthly payroll that a small employer would write in. Contractors or the self-employed should use 1099 forms and other tax documents to help them verify these forms.

How to calculate a 1099 salary for a PPP loan

Bradley noted that contractors and sole proprietors are eligible for up to $100,000 in annual income, except then the amount is prorated. One way to calculate this is by adding up all 1099 revenue for 2019 and then divide that by 12 (months) and then multiply that by 2.5 (months). (For example, if you earned $50,000 in 1099 revenue in 2019, then you should apply for roughly $10,400.)

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Who 1099 workers can reach out to for advice

Wetson said contractors and self-employed individuals should make sure they are fully prepared before applying for loans. She also recommends speaking to a SCORE mentor or SBA resource partners such as SBDCs and Women’s Business Centers to help think through taking out loans and other big business changes. “We are staying up to date making sure we know the ins and outs the best we can and we can help you navigate this,” Weston said.

Which 1099 workers qualify for PPP loans

Hall said almost all self-employed American business owners will qualify to take part in the PPP loan program. “You do qualify — period,” Hall said. “It’s going to be a very rare situation that you as a self-employed business owner don’t qualify. If you have a business, you qualify … and, most important of all, today you should start the application process.”

What to know about defining 1099 payroll and loan forgiveness

Hall said when it comes to defining or proving payroll for 1099 employees, he said it’s fairly simple. “Your payroll is your net earnings from self-employment,” Hall said. “Once you have demonstrated that you have, [for example] $100,000 in net earnings from self-employment, you get a PPP loan for $15,000. By definition, that $15,000 is indeed used for payroll because it goes to your family, helps you buy food or pay your mortgage. It is my expectation from a practical standpoint that these PPP loans for 1099 people will be forgiven.”

Be wary of scams related to PPP

One final warning for 1099 workers and businesses seeking help: Be aware of scammers who reach out and claim they will help with PPP applications. Reach out directly to a bank, SCORE office, SBDC office, local Chamber, or other trusted source for help and do not give out your financial or personal information to unverified sources.